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← Series 7: Opens & Maintains Customer Accounts
Series 7 practice questionmediumAccount Types — UTMA vs. UGMA

What is the primary advantage of a UTMA account over a UGMA account?

  1. AUTMA accounts have no tax obligations
  2. BUTMA accounts allow the minor to trade securities before reaching the age of majority
  3. CUTMA accounts do not require a custodian
  4. DUTMA accounts allow a wider range of asset types to be held, including real estate✓ Correct answer
Explanation

Why D — UTMA accounts allow a wider range of asset types to be held, including real estate

The primary advantage of UTMA over UGMA is that UTMA allows a broader range of assets to be transferred to the minor, including real estate, fine art, patents, and other property types. UGMA is generally limited to financial assets such as cash, securities, and insurance policies. Both account types still require a custodian and are subject to taxation.

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